E3-3
Journal Entries The following are selected accounts and account balances of Sawyer Company on May 31:
Debit
Cash $12,523
Accounts Receivable 23,052
Inventory 16300
Office Equipment 35,860
Cost of Goods Sold 22,354
Utilities Expense 1,124
Credit
Accumulated Depreciation $10,540
Notes Payable 3,400
Accounts Payable 3,500
Sales Revenue 47,872
Gain on Sale of Office Equipment 400
Sawyer entered into the following transactions during June:
June
3 Sold for $700 office equipment that had cost $2,000 and has associated accumulated depreciation of $1,500.
7 Made sales of $2,000 on credit; the cost of the inventory sold was $1,200.
10 Purchased $1,000 of inventory for cash.
15 Purchased new office equipment costing $4,000, paying $1,500, and signing a 90-day note for the balance.
16 Received check for June 7 credit sale.
17 Made cash sales of $4,200; the cost of the inventory sold was $2,300.
20 Purchased $2,600 of inventory on credit.
24 Returned $200 of defective inventory from the June 20 purchase for a credit to its account.
29 Paid for the June 20 purchase minus the return.
30 Paid the June utility bill, $210.
Required:
1. Record the preceding transactions in a general journal.
2. Post to general ledger T-accounts.
E3-4
Adjusting Entries Your examination of Sullivan Company’s records provides the following information for the December 31, year-end adjustments:
1. Bad debts are to be recorded at 2% of sales. Sales made on credit totaled $25,000 for the year.
2. Salaries at year-end that have accumulated but have not been paid total $1,400.
3. Annual straight-line depreciation for the company’s equipment is based on a cost of $30,000, an estimated life of 8 years, and an estimated residual value of $2,000.
4. Prepaid insurance in the amount of $800 has expired.
5. Interest that has been earned but not collected totals $500.
6. The company has satisfied performance obligations entitling it to rent in the amount of $1,000.
7. Interest on a note payable that has accumulated but has not been paid totals $600.
8. The income tax rate is 30% on current income and is payable in the first quarter of the next year. The pretax income before the preceding adjusting entries is $6,800.
Required:
Prepare the adjusting entries to record the preceding information.
E3-9
Closing Entries Lloyd Bookstore shows the following dividends, revenue, and expense account balances before closing:
Debit
Dividends $250
Cost of Goods Sold 1,350
Salaries Expense 300
Utilities Expense 130
Miscellaneous Expenses 120
Income Tax Expense180
Credit
Sales Revenue $2,200
Gain on Sale of Land 300
Required:
Prepare closing entries.
P-3-6
Journal Entries, Posting, and Trial Balance Luke Unlimited Company’s account balances on November 1 are as follows:
Debit
Cash $ 7,800
Accounts Receivable 12,530
Notes Receivable 6,000
Inventory 25,121
Prepaid Insurance 840
Office Supplies 465
Land 74,350
Buildings 66,580
Equipment 37,620
Patents 25,000
Cost of Goods Sold 32,000
Sales Salaries Expense 6,200
Office Salaries Expense 4,300
Advertising Expense 1,250
Utilities Expense 1,845
Interest Expense 210
Credit
Allowance for Doubtful Accounts $740
Accumulated Depreciation: Buildings 21,400
Accumulated Depreciation: Equipment 11,480
Accounts Payable 38,750
Notes Payable 2,400
Common Stock, no par 165,000
Retained Earnings, January 124,958
Sales Revenue 36,833
Interest Revenue 550
During the month of November, the following transactions took place:
Nov.
2 Made cash sales of $3,400; the cost of the inventory sold was $2,040.
3 Purchased $900 of inventory for cash.
5 Sold an unused 1/2 acre of land for $4,000; the land had originally cost $3,650.
8 Purchased a 2-year comprehensive insurance policy for $528.
12 Leased an unused portion of its building to WebbCo, collecting 6 months’ rent in advance at $220 per month.
